The nine-person MPC voted unanimously to hold rates and maintain government bond purchases at £435 billion and corporate bond purchases at up to £10 billion.

The BOE said prices would rise following the 18% collapse in sterling after the Brexit vote.

"Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target. This effect is already becoming evident in the data," the central bank said. "CPI inflation rose to 1.6% in December and further substantial increases are very likely over the coming months."

The BOE slightly increased its inflation forecast, predicting inflation will peak at 2.8% in the first half of 2018. Tom Stevenson, an investment director at Fidelity International, says in an email: "With the Old Lady of Threadneedle Street prepared to keep sitting on its hands when it comes to raising rates and with inflation expected to breach the central bank's 2% target this year, anyone with savings still sitting in cash will struggle to generate real returns."

The BOE also increased its GDP growth foreceast to 2.0% from 1.4%, signalling the better-than-expected performance of the UK economy since the June referendum.

"Domestic demand has been stronger than expected over the past few months, and there have been relatively few signs of the slowdown in consumer spending that the Committee had anticipated following the referendum," the central bank said.

"The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor's Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households," the BOE said.

The BOE still believes growth will slow as Brexit negotiations begin, predicting GDP growth of 1.6% in 2018 and 1.7% in 2019.

Shilen Shah, bond strategist at Investec, said: "The resilience of the UK consumer has led the BOE to further increase its GDP forecast 2016 to 2% to 1.4%. However, there are hints that the tolerance of a number of MPC members to higher inflation is close to their limit."

On Brexit specifically, Carney told journalists: "The Brexit journey is really just beginning."

"While the direction of travel is clear, there'll be twists and turns along the way," he said. "Whatever happens, monetary policy will be set to return inflation sustainably to target while supporting the necessary adjustments in the economy."